Business Management Assignment: Impact Of Pandemic On Malaysian Hotel Industry
Task: Write an evaluative essay using established models and theories considering based on macro-characteristics such as factor endowments, institutions, politics, and culture that affect country- and firm-level economic outcomes in Asia. Explore the role of national environment and the impact of regional environment to the business. Essay must synthesise and evaluate strategic management issues, justify with references and explain thoughts. Student must present all arguments and interpret evidence supporting the arguments precisely. Work should be coherent and well-structured in presentation and organisation. All writing should be academic in style, formal, focused, concise and subject specific.
Topic to be considered in the business management assignmentis “The effect of the pandemic on Malaysian Hotel Industry’s business management and decision making”.
From the time when the COVID-19 pandemic had hit the world, no industry and no sector has been untouched with its impacts. Even now the situation in numerous places is still undergoing its aftermaths. The pandemic has negatively impacted the hospitality and tourism sector of Malaysia and the hotel managers are still working hard to survive and restructure the lost growth and returns (Shari, Yazid&Shamsudin, 2020). The study aims to highlight the impact of COVID-19 on Malaysia hotel industry and the challenges faced to overcome the tough situations. On 25th January 2020, the outbreak of COVID-19 was seen when three Chinese citizens were detected with the virus that entered Malaysia (Foo, Chin, Tan, &Phuah, 2020). As per the data, there were reported approximately 6000 cases of COVID-19 in Malaysia with around 100 deaths by the end of April month. It was marked as the global health emergency and the situations kept on going worse (Karim, Haque, Anis&Ulfy, 2020). The tourism and hotel sector is one of the most contributing industries in the economic growth of the country. As per the data, 25.8 million tourists arrived in Malaysia in the year 2018 contributing 13.3% in the nation’s GDP (Foo, Chin, Tan, &Phuah, 2020). There is a huge importance of hotel industry in Malaysia as it has grown exponentially and also supported other industries in various forms such as revenue generation, foreign exchange production, and employment (Azra, et al, 2021). It has also helped in the balance of payments. The hotel industry leads to economic growth of Malaysia as with the expansion in this sector drives tourism growth which in turn increases the revenue and economic progress of the nation. The hospitality business is one of the leading factors which impacts the day-to-day business and running of various other sectors. The growth of the hotel industry helped in providing employment opportunities and decreasing the rate of unemployment in return. Also it gives rise to the growth and business of food and confectionaries. The higher the emergence of hotel industry, the greater the rate of customers and visitors and therefore it indirectly relates to the growth of many other sectors and industries. But with the uncertainties and pandemic like COVID-19 had hit hard the hotel and industry and so the growth of other sectors. The paper will highlight how the hotel industry has been impacted with the pandemic and what changes took place all over the nation to overcome the crisis caused due to COVID-19.
Problems and challenges faced by the Malaysian hotel industry due to COVID-19
As the COVID-19 hit the hotel industry of Malaysia, there are several problems and challenges faced by the sector. Following are some of those major issues that restricted the smooth running of the hotel business:
The challenges and negative impacts of the pandemic could be felt over the entire hotel industry and tourism ecosystem. The crisis caused due to COVID-19 resulted into an economic, socio-political, natural disaster, and tourism demand crisis. The entire tourism industry has faced a longer period effect which has declined the revenue and growth of the sector which resulted in an economic recession (Ioannides&Gyimóthy, 2020. The tourism impacts of COVID-19 were highly uncertain where there has been a sudden decrease in the same-day trips and overnight trips due to which the hotel industry faced a great loss and revenue drop in the internal figures. As per the data, 71% of the hotels in Malaysia were not able to make for approximately 6 months in the absence of federal assistance, provided the present and future travel demand. Also 77% of the entire hotel industry was also forced to lay off the employees and more than half of the hotel managers agreed that they were forced to close their channels due to the harsh impact of COVID-19 (Foo, Chin, Tan, &Phuah, 2020). This has become a major challenge for the hotel industry to survive as one-third of the hotels went bankrupt or were forced to sell their places in order to pay off the expenses and salaries. Because of the COVID-19, the tourism industry has been completely disrupted and the sector is struggling hard to survive and thus as a direct impact the hotel industry failed to survive and earn revenues (Karim, Haque, Anis&Ulfy, 2020).
Restricted Airlines and Cruise Entry
COVID-19 had affected the hotel industry worldwide. The international flights had been grounded and all the activities involving cross borders have been discouraged. In case of airlines business, there has been recorded a decline rate of 60% in the Airline’s global seat and also a total of 2699 million in the total number of passengers between the year 2019 and 2020. As per the data, there has been reported approximately $371 billion loss in the total operating revenue of the airlines gross passenger of the year 2020. All these data reflect the overall losses faced by the airline industry (Foo, Chin, Tan, &Phuah, 2020). The entry from the cruise was also restricted because of the pandemic and declined foreign entries. All these legal restrictions and discontinued cross borders dealings and airline business had put a direct impact upon the hotel industry of Malaysia (Lee, Worsnop, Grépin, &Kamradt-Scott, 2020). There were no new bookings of rooms and a complete stop was seen on the leisure activities. Also there were an increase no. of booking cancellations, shutdown of the famous attractions, closed accommodations, and a lot of cancelled events. Therefore, the hotel sector of Malaysia faced enormous challenges to run the business.
Change in Consumer Behaviour
Among other issues, the one which top the list was the change in the behaviour of the consumers. People were scared and social distancing seems the last resort to save oneself. There was a sudden change in the lifestyle of people as they prefer dining at home rather than visiting hotels and cafes (Patil & Patil, 2020). Such a change in the lifestyle directly resulted in the decrease demand for outside food and stay at the hotels. For example, people start learning how to bake and focused more towards fitness instead of leisure and unhealthy food habits (Karim, Haque, Anis&Ulfy, 2020). All such things were a clear indication of the changed preferences of the masses; it resulted into buying of household products over spending on fun and leisure activities. At some degree, people started avoiding the physical world and remain isolated for months. The word social gathering seems to be a threat and this completely brings a drastic change in the lifestyle of the people of Malaysia. Therefore, it became of the major challenges for the Malaysian hotel industry to attract the customers and once again increase their sales.
Limitations, rules and regulations
The socio-cultural, political as well as economic systems of Malaysia had been significantly impacted due to COVID-19. 100% of the destinations in Asia had adopted numerous restrictions in respect with COVID-19 since its arrival in January 2020 (Foo, Chin, Tan, &Phuah, 2020). There were major travel restrictions which hinder the arrival of visitors and affected the revenue and running of the hotels in Malaysia (Parmet&Sinha, 2020). The unprecedented impacts has brought huge crisis upon the hotel industry and the tourism sector of the country. There were set lot of limitations, rules, and regulations by the government in order to protect the citizens from this threatening virus. The major hit for the economy was due to continuous lockdowns that took place in the country. To regulate the norms of social distancing, community lockdowns were in place and due to which people were restricted to visit at their respective places and were banned to visit nearby places, cafes, and hotels. There was also a mandate curb on crowding due to which the hotels and restaurants were banned to get open and allow dining (Karim, Haque, Anis&Ulfy, 2020). All such regulations and limitations played a major role and possess a great challenge for the hotel industry to survive. Other than the regulations and lockdowns imposed by the regulatory bodies, people started following self-quarantines In many areas there were mandatory quarantine and in rest masses quarantine themselves so that they can remain safe and protected from this evil infectious viral. A number of stay at home campaigns were also took place that insisted people to stay at their places and avoid visiting restaurants and hotels. All these limitations and regulations had suddenly stopped the tourism and hotel businesses which resulted damages to the nation’s economy and GDP.
Overcoming the issues caused due to COVID-19
Improved Regulations and Norms
With an increase in the social distancing norms and restricted use of cash, there realized a huge demand for contactless services and reliability on the online apps. Similar to this, the hotel industry also adopted various measures to overcome the challenges cause due to COVID-19. Virtual entertainment and online parties became the key options for the hotels to run their business(Karim, Haque, Anis&Ulfy, 2020). The hotels started organizing virtual parties, food festivals and online events where the visitors are provided access to various attractions of the country and also access to numerous destinations with the help of virtual teams and improved technology. To overcome the challenges of health and safety issues, the hotel industry adopted measures to keep a strict eye over the monitoring of the health of the new visitors. The hotels keep a 25% local occupancy rate and a total of 50% of the workforce to keep the places less crowded(Foo, Chin, Tan, &Phuah, 2020). All these policies help the hotel industry to overcome the challenges and again restart their businesses and operations. Appropriate education and training is also provided to the employees so that they can have an in-depth understanding of the symptoms as well as the preventive measures of COVID-19. To overcome the challenges of COVID-19, the hotels are following various plans and policies where they have appropriate sitting arrangements for dining where the social distancing norms can be followed as well as adequate sanitization method for safety of the masses. As well as health certificates are also requested from the visitors so that there can be reduced chances of spread of infection from one to another (Parmet&Sinha, 2020).
Supportive Government policies
Because of the pandemic, the hotel industry faced huge losses and so the employees and the staff. There came in rescue the various government policies such as the sound decision making, there were offered paid as well as some unpaid leaves to the employees. In order to save the jobs, salary reduction was also implemented in various hotels. The government policies played an imperative role in forming the recovery strategies. Stimulus program was created to support the hotel industry such as tax relief program as well as subsidies were also offered to the businesses that included electricity subscriptions and garbage collection. All these measure and strategies help in offering sustainability to the hotel sector. Supportive government policies play a key role in making the economy strong and help the nation to stand against the harsh impacts of the pandemic (Karim, Haque, Anis&Ulfy, 2020).
Increase in Domestic Tourism
As the international flights and airlines were stopped and the hotel industry faced enormous challenges, several measures were taken to boost the domestic tourism. To regularize the hotel industry and restart the businesses, the government were more focused to popularize the domestic tourism such as local attractions and hotels (Khatib & Nour, 2021). There were continuous delayed in travel plans and cancelled booking which cost an immense loss to the industry. Therefore, the government reduced the bans and restrictions over domestic tourism and also offered digital vouchers to promote the local tourism. To promote the domestic tourism, a number of hotels have also taken use of various technologies for the service deliveries so that there is less human-to-human contact (Volgger, Taplin&Aebli, 2021). In multiple hotels of Malaysia, there are service robots which provide services to the customers as well as there are technologies like contactless payments, touch less elevators, and also digital menus (Tahajuddin&Sulaiman, 2021). These digital menus help the customers to order without any human touch and order in a safe and hygienic way to decrease the chances of spread of infection. The personal mobile devices are used for scanning the QR codes and to order and to make payments(Karim, Haque, Anis&Ulfy, 2020). When the government improves the demand for the local tourism then it is beneficial for the people as well as the local hotels and businesses as it reduces the dependency upon the foreign resources as well as it also give a source of earning to the local vendors.
Analysis: Based on research methodology and Complexity Theory
In this paper, the methodology which has been implemented is the secondary qualitative research design. The major reason behind using and implementing this methodology is that the secondary qualitative data is depended upon the existing literature. The data which has been used is majorly from the peer reviewed articles, the various reports generated by the WHO i.e. World Health Organisation, the various documents issued by the government and news articles (Angeli&Montefusco, 2020). These are the key resources for the qualitative research design secondary data. Also there has been analysed and extracted data from a series of online sources and the experience of the local business houses. The qualitative secondary data is of immense importance as it holds certain value as they are already based on genuine sources and are peer reviewed.There are numerous theories which have been emerged in order to address the various hospitality sector issues and challenges such as value co-creation theory, norm activation model, social exchange theory, and complexity theory (Japutra&Situmorang, 2021). The hospitality and tourism industry is highly dynamic and it is very much unstructured. There were various chaotic situations in the tourism and hospitality sector which took place due to COVID-19 and resulted in high complexity of the internal as well as external stakeholders.
In this paper, the complexity theory was implemented in order to understand and analyse the impact of COVID-19 on the Malaysian hotel industry as this theory offers an understanding of the various systems and how any situation is evolved, adapted and grow and how the environment interacts with that situation or issue and how the people overcome them (Karim, Haque, Anis&Ulfy, 2020). As per the analysis through complexity theory, the entire globe is interconnected, there is no individual that lives in isolation and there is no constant process that remains in the dynamic non-linear systems. If there is any single disturbance then it leads to a great change in the entire system and the global business is intertwined. A number of researchers have used the complexity theory to understand the various aspects of the organizations such as marketing, strategy, and leadership (Agrawal, 2021). There has been also an in-depth understanding of the crisis management through complexity theory. This theory helps in exploring the complex nature of hospitality sector and issues at multiple levels. Because of the pandemic, there arose various unpredictable situations that could be explained by the social phenomenon of the complexity theory (Lee, Jais& Chan, 2020).
Complexity theory offers essential insights from the strategic point of view which influences the various decisions regarding tourism and hospitality sector dynamics which have been disturbed due to pandemic caused unforeseen phenomena (Nicola, et al., 2020). The theory specified that the pandemic took place is highly unique as it blends multiple disasters combining external incidents on the occurrence of which the businesses have no control as well as the crisis such as hotel industry related disruptions that resulted in the closure of the businesses. It has been noted that because of COVID-19, there were much complex issues and unexpected barriers occurred in various domains and health related concerns were raised which ultimately impacted the nation’s political, social, and economic situations (Karim, Haque, Anis&Ulfy, 2020). In Malaysia, where complete lockdown took place and also it was extended for a certain period of time, it possesses a heavy strain upon the country’s economy. The markets were crashed and so the GDP. Therefore, if that particular issue was focused then it may lead to trade-off situation as at the same time multiple other issues were also surfaced which also needed adequate attention to get resolved. Hence, the COVID-19 shows complex non-linear issues to the hotel and tourism industry (Hidalgo, Martín-Barroso, Nuñez-Serrano, Turrión& Velázquez, 2022). When the complexity theory is applied, it helped in resolving issues and crisis situations such as the welfare of the employees and business disruptions through holistic understanding of the various dynamics (Kwok & Koh, 2021).
With the analysis drawn based on the complexity theory, it has been seen that the human-to-human transmission of COVID-19 is very much fast which results into a serious disruption of the hospitality and tourism industry (Hidalgo, Martín-Barroso, Nuñez-Serrano, Turrión& Velázquez, 2022). In previous researches, it has also been noticed that there must be included the understanding of the pandemic and its related diseases in the dynamic structure of the preferences of the consumers so that it does not hit the industries so badly. It also support that the theory is adequate in order to study the crisis caused due to pandemic as it includes the dynamic of multiple stakeholders (Nilashi, et al., 2021). On the other side, there has been used a triangulation of multiple research design methods such as a combination of secondary data from newspaper articles and online journals with a qualitative approach with complexity theory (Karim, Haque, Anis&Ulfy, 2020). The authors and researchers have defined the vulnerability of hospitality sector in Malaysia resulting from the issues caused due to pandemic. As per the reports and articles, the major aspects behind the effective changes are government collaborations, strong leadership and vision, good governance, trust, and political will to improve various sectors (Wernli, et al., 2021). There must be adequate knowledge which is needed to be shared in respect with the responses towards the potential hospitality threats, responses, preparedness capacity, as well as hazard awareness. It also reflects the need of dedication and commitment to resolve these uncertain issues. The complexity theory is likely to expand and support the analysis of the data through in-depth understanding of the various dynamics and structures and hence offering managers with a correct and appropriate management strategy for successful long run (Said, Rahman, AbdMutalib& Shah, 2021).
Findings and Implementation for future of the Asian Market
From the overall analysis of the paper, there are several finding that can be stated. The findings suggest that there is an immense need of technological integration in the improvement of the hospitality sector and its operations. As in the coming future, the hotel industry and the decisions taken in this sector would much likely to impact the economic condition of the country. Therefore, considering the hotel industry as an integral part of the Malaysian economy, the government must keep a strict eye upon its continuous growth and development and also to prepare policies to save the industry from other uncertainties that might strike the hotel industry (Dimitrios, Christos, Ioannis&Vasiliadis, 2020). In the field of artificial intelligence (AI), there are several recent developments and technologies in the hotel industry and service delivery for the safety reasons of the people. The findings also revealed that the government has also implemented the National Recovery Plan which helped in forming recovery strategies and shaping resilience solutions to avoid the downturn and shutting down of the small businesses and hotel industry. To save the hotel and tourism industry of the Asian market, there are implemented various strategies and policies. To sustain the operations of the hotel industry, it has been found that there must be minimum interaction between the visitors and the hotel employees so that the health and safety of the people can be considered. In other major findings, it has also been revealed that there is creation of new offering for generating revenue and income. Such as virtual shows and events have been conducted for the guests such as virtual talk-show via social media platforms where they can participate as well as social distancing norms can also be followed. Also the findings suggest that there has been a sudden reduction in the labour to save the overall costs of the hotel industry. There has been decreased budget and costing over retaining, training, and recruitment of the staff so that the existing staffs can be retained and can get their wages on time. The findings also stated that there has been a sudden increase for the local tourism rather than international tourism due to international barriers and sudden cancellations of flights and decline in the number of foreign visitors.
Conclusion and Recommendations
With the overall analysis of this paper and deep discussions through qualitative research and secondary data, it has been concluded that COVID-19 had a great impact upon the Malaysian hotel industry, the decision making and the business management. Each and every operation of the sector had hit hard due to the uncertainties caused by the pandemic. Not only the hotel industry but the entire hospitality and tourism sector had been affected with the aftermaths of COVID-19. It has been concluded that there were several challenges which were there for the Malaysian hotel industry to face and overcome such as change in the government policies, lockdowns, restricted business operations, social distancing, quarantine, loss of jobs, etc. The decision making was harshly impacted as the hotel managers were in such a big dilemma whether to decrease the employees or cut the salaries. Even managing of such big hotels and restaurants was the toughest task for the managers and higher authorities. It has been seen that a number of hotels were on the edge of shutting down because of the non-functional businesses. When analysed on the basis of the complexity theory, it has been analysed and concluded that there is no particular sector which has been solely impacted by the pandemic but rather all the sectors and industries had been affected. The theory shows the relation between the uncertainties and the way people can deal with it.
There are certain recommendations for the better future of the Asian market and the hotel industry. It has been recommended that there must be favourable government policies which support the local and small businesses so that they can withstand the negative and harsh impacts of COVID-19 (Davahli, Karwowski, Sonmez&Apostolopoulos, 2020). Secondly, it is recommended that there must be subsidies should be provided so that the businesses and hotels can run their operations and does not close down. These subsidies can help the businesses to again start their operations and have a living. From the business management and decision making point of view, it is recommended that the managers must have a brain storming sessions and open forum discussions where they can understand the perspectives of various levels and then can take adequate decisions (Shah, et al., 2020). It is recommended that instead of firing employees out of their jobs, less number of people should be recruited so that businesses can manage to give pays to the existing ones. As well as, one of the key recommendations is to provide trainings to the people, employees and other staff members to get ready to deal with various uncertainties so that in future if any such pandemic or other issue arises, they are much ready for the same and the businesses are not completely shut down (Tahajuddin&Sulaiman, 2021). There is an immense need that both companies as well as government should frame policies that support the local business in such tough time rather posing restrictions and guidelines which resulted in shut down of the ventures.
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